Notice of Default

When the lender files a Notice of Default, the homeowners options are more limited.  The number #1 tip any financial advisor will say first and foremost is to call the mortgage lender, and let them know what is happening.  Keep calling the lender and let them know progress that has been made.  It is even better to phone a mortgage lender before a missed payment, as they view that customer pro-active in handling the hardship.  Lenders are often reluctant to work out repayment schedules after foreclosure proceedings have been commenced.  If a homeowner is at the 90 day mark of missing mortgage payments, they will be publicly in default.  The homeowner is then given a certain time period to bring the payments current, and pay the costs of filing the foreclosure and the opportunity to stop the foreclosure.  This is often called the reinstatement of the loan. If a homeowner cannot make up the missed payments and the lender will not work with them, here are some options to stop the foreclosure:

•Consider selling the Home- Sell it yourself, or hire a real estate agent.  Be sure to get a complete time line of what that hired help will do, because your time is very limited.  If you plan on working for yourself, consider getting family involved to help you advertise.  There is plenty of free advertising out there such as craigslist and other websites, the biggest tip is to post every day!  You need to keep on top of getting the word out there that you are selling your property.  Be sure to get a full plan of the marketing agenda of the hired help, as again....  your time is very limited at the 90 day point.  Forsalebyowner is able to list your home on the MLS where in the past you needed a realtor.  Check out my post here.

•Consider a Short Sale- If your home is worth less than the amount you owe, you might be a candidate for a short sale.  This is called a pre-foreclosure redeemed.  A lender needs to give permission of a short sale before it occurs, because in essence, they are being asked to accept less than the loan amount.

•Sign a Deed-in-Lieu of Foreclosure
This is called deeding the home back to the lender. The homeowner gives the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Deeds-in-lieu of foreclosure affect credit the same as a foreclosure.

You can see a blown up version of the following chart here